Oil tax could get boost from billionaire

California Attorney General Kamala Harris prepares to address delegates at the 2013 Democratic Party state convention, where an oil tax was among the hot topics.

California Attorney General Kamala Harris prepares to address delegates at the 2013 Democratic Party state convention, where an oil tax was among the hot topics.

Photo: Rich Pedroncelli, Associated Press

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Billionaire Democratic activist Tom Steyer wants 2016 candidates to address what he calls the “urgent” issue of income inequality, specifically laws that allow wealthy private equity managers and venture capitalists to be taxed at a lower rate.

For years, California liberals have been foiled in their desire to tax companies for extracting oil from California. But a potential "game changer" for their cause emerged Saturday at the California Democratic Party convention - San Francisco billionaire Tom Steyer.

Steyer, who retired last year from the Farallon Capital hedge fund he managed to devote his time to environmental and climate change issues, told delegates Saturday that he thinks the oil tax should be a top priority for the state. Offstage, he said he is willing to "help in any way."

Such a tax could generate $3 billion a year for the state. Steyer told delegates that despite producing 8 percent of the country's oil, California is the only state that does not charge oil companies to extract the resource.

It's particularly important to enact such a tax now, he argued, before petroleum companies start tapping one of nation's largest shale oil deposits, which has been found in California.

"California has been an energy leader in so many ways," Steyer said. "But we're a laggard in one."

Steyer emphasized that he first wants to see if the state Legislature acts on pending severance tax legislation before considering bringing an initiative to the ballot in 2014.

Party divided

But even state Sen. Mark Leno, D-San Francisco, who is co-sponsoring an oil tax measure, admitted that it will be "a heavy lift" to win passage - despite the Democrats' supermajority in Sacramento.

"All Democrats don't feel the same way as Bay Area Democrats do on this," said Leno.

Plus, even if the Legislature were to approve a severance tax, Gov. Jerry Brown has said that he will not approve any taxes without "a vote of the people."

"It may have to go to the ballot," Leno said.

That's where Leno said Steyer's wealth and passion "could be a game changer" in countering the oil industry's power. Petroleum interests gave $70 million in 2012 to candidates and political committees, according to the nonpartisan Center for Responsive Politics.

In 2010, Steyer's financial support was instrumental in opposing a ballot measure that would have gutted AB32, the state's landmark climate change law. And last year, he contributed almost $30 million toward Proposition 39, which by closing a corporate loophole could raise $1 billion for education and energy efficiency issues.

Political graveyard

However, the oil severance issue has been a political graveyard for other wealthy liberals. In 2006, Hollywood producer Stanley Bing poured $49.5 million into Proposition 87, an oil severance tax measure, but petroleum companies countered with $95 million to soundly defeat it.

Those same petroleum interests helped fuel Steyer's estimated $1.4 billion fortune, which he amassed as the head of Farallon Capital.

According to Securities and Exchange Commission filings, Farallon Capital holdings include BP, the petroleum company involved in the 2010 Deepwater Horizon explosion in the Gulf of Mexico, considered one of the world's worst ecological disasters. Steyer has initiated having his personal portfolio "greened" - purged of any petroleum-based interests.